Covid-19 impacts on markets

Review of the impacts of the Covid-19 pandemic on seafood markets during January to June 2020.

Key points

  • Export markets were hit first, as key countries including China, Italy, Spain and France entered lockdown.
  • Retail sales soared as the UK began life in lockdown, before levelling off to an increased level compared with the same time in 2019.
  • UK foodservice markets collapsed at the end of March as lockdown put a hold on eating out and tourism.
  • As businesses along the UK seafood supply chain lost access to their usual markets, new small-scale markets to sell direct to consumers emerged.

Retail 

Around March - leading up to and into the UK’s lockdown - retail sales soared as consumers began stockpiling food. Many seafood businesses supplying the domestic retail market saw a significant increase in demand.

This boost was largely driven by frozen and tinned (ambient) food sales. Chilled seafood sales saw less of an increase as shoppers looked for items that would keep for longer.

Chilled +5%, Frozen +20%, Ambient+17%, Overall +13%
Table showing UK retail volume Jan-Jun 2020 compared to 2019.

Talking about the impact Scott Johnston, Technical & CSR Director, at Young’s Seafood noted:

At Young’s, we saw an uplift across the board which began in the lead up to lockdown. This started with strong chilled sales and was followed by an uplift in frozen sales as shoppers switched to bigger, less frequent shops and filled up their freezers with 142m fewer shopping trips taken in between March and April.

We have seen this trend across the whole industry as data shows that frozen food has grown 19.8% year on year, whilst frozen fish has increased sales by 18.3% (£41.5m) in the same period, attracting an extra 1.2m shoppers. This is largely due to the convenience of frozen food, it helps families plan their weeks, is cost effective and reduces waste. Furthermore, it makes consuming fish simpler on the whole with more meals taking place at home than ever before.
Scott Johnston, Technical & CSR Director, at Young’s Seafood

At its peak, total seafood weekly volume sales grew by 56%. The ambient and frozen sectors benefitted the most from panic buying as shoppers stocked up on cupboard staples and filled their freezers. Familiar favourites such as fish fingers showed the highest growth as shoppers turned to the crumb for comfort. Anecdotal evidence also suggests that Scottish salmon proved popular amongst shoppers.

Lines show weekly sales peak before UK lockdown: chilled 22%, frozen 83%, ambient 120% and overall 63%.
Graph showing % change in weekly UK seafood retail sales volume 2019 vs 2020.

Carly Arnold, European Category Fish Director at Nomad Food, home of the Birds Eye brand, saw similar trends in other countries. She said:

Across Europe, lockdowns created a spike in demand across all our core fish portfolio with increased at home meal occasions. As lockdowns have eased demand for frozen fish has continued, suggesting a behaviour change to more frozen food consumption and reflecting the change in consumer attitude to the category and its benefits such as reduced food waste.
Carly Arnold, European Category Fish Director at Nomad Food

Many businesses experienced such high demand that they ran down existing stock. This caused them to dip into buffers built up ahead of EU Exit or import additional frozen raw material. Sourcing other materials, such as cardboard for packaging, also presented challenges. Most species saw a boost in sales volume of over 10%. Langoustine (including scampi products), lobster, langoustine and basa showed the highest volume growth compared to the same period last year.

Some businesses which previously supplied the domestic foodservice market sought to adapt product formats to supply retail outlets. They faced some challenges along the way in doing this.

After peak stockpiling subsided at the end of March, seafood retail sales fell back but remained above previous levels. By the end of June, total volume of weekly seafood sales was still 15% higher than last year. This continued to grow, albeit at a lower level.

Foodservice

As the UK entered lockdown, the foodservice market collapsed. Hotels, restaurants and pubs closed or reduced service. Those remaining open did so in a limited capacity, offering take away and delivery-only options.

Diagram showing -57% dining sector by visit and -33% fish and chips sector by visit

An estimated four out of five foodservice businesses closed as a consequence of lockdown. This resulted in an estimated 57% drop in out of home visits by consumers in March and April. Businesses reliant on tourists were hit hard. Visits to these businesses went down an estimated 72% across March and April. The government furlough support scheme also made it more profitable for some foodservice businesses to stay closed for longer. This slowed the return to work as restrictions began to ease in May and June.

Many fish and chip shops closed temporarily at the start of lockdown. The volume of trade was initially unmanageable and they needed to find safe ways of working. By mid-May fish and chip shops were faring better but still running at much reduced capacity.

Andrew Crook, President of trade body the National Federation of Fish Friers (NFFF) said:

Some shops that stayed open or reopened too soon got overrun at peak times, but many were able to successfully adopt online ordering and timed collection or delivery systems to smooth demand.
Andrew Crook, President of the National Federation of Fish Friers

The effective closure of the UK foodservice market left their suppliers facing challenges too. Many temporarily closed or adapted their products to supply into retail markets or directly to consumers. Bad debt has also been a major issue for many suppliers and processing businesses. Some were still waiting for invoices to be paid for products supplied as far back as December 2019.

Exports

Key UK seafood export nations, including China, Italy, Spain and France, implemented lockdowns and other restrictions to slow the spread of Covid-19. This meant that many seafood businesses in the UK lost key export markets overnight.

The issues faced by exporters were compounded by issues of bad debt. Many invoices were unpaid for products supplied before lockdown restrictions began. The value of UK seafood exports fell by 19% in January-March and 28% in April-June, compared to the same periods in 2019.

Fresh fish and live shellfish account for a significant part of UK seafood export. They made up 45% of all non-salmon seafood exports for human consumption in 2019. Many businesses soon found themselves with no immediate alternative routes to market. Any trade that did continue was further hampered by significant increases in transport costs (air and container freight) and reduced logistics services. This increased delivery time and in some cases made it impossible to get fresh product to market.

Demersal value -20%, volume -16%. Pelagic value +2%, volume +13%. Shellfish value -40%, volume -35%. Overall value -23%, volume -12%
Table showing UK exports for Jan-Jun 2020 compared to 2019

Restrictions began to ease around the world from April onward, but export markets were slow to return for many UK businesses. They were still well below normal levels at the end of June.

Direct Sales to Consumers

In response to the widespread loss of traditional markets and increased demand from consumers for fresh local seafood, some businesses chose to innovate and adapt.

Fishing vessels, seafood processors and fishmongers tried to make up for lost revenue by developing or expanding small-scale domestic markets by selling straight to the consumer. Other community or commercial initiatives, such as Seafood Cornwall’s #FishToYourDoor initiative, were successful in helping fishermen engage directly with consumers.

Bar chart showing % change in value 2019 vs 2020 by month for demersal, pelagic and shellfish exports as per table below.
  Demersal Pelagic Shellfish
Jan -20% -18% -20%
Feb -10% -12% -30%
Mar -19% -7% -59%
Apr -24% 33% -59%
May -29% 21% -51%
Jun -14% 42% -20%

While the rise of direct sales did attract interest, the impact was minimal when compared to lost export, foodservice or wholesale trade. For many businesses these sorts of adaptations were not possible. However, direct sales did offer a lifeline to some businesses. Even if direct sales came with new sets of challenges it enabled some businesses to continue operating. They also satisfied an appetite from consumers looking to shop differently during lockdown.

Click the link below to read stories from seafood businesses from across the UK that started or expanded direct sales operations.

Read more about Covid-19 impacts

Contacts

For more information contact

Ana Witteveen
Economist
t:
0131 524 8659
m:
07815 428 554